APAS calls for railways to pay demurrage when grain is delayed

The president of Saskatchewan’s largest farmer-directed lobby group wants railway companies to cover port demurrage costs that occur when rail service is delayed and deliveries of contracted grain to port fall behind schedule.

Todd Lewis, president of the Agricultural Producers Association of Saskatchewan, said Canadian National Railway and Canadian Pacific Railway should cover financial penalties that are currently absorbed by farmers when contracted grain fails to arrive at export position on time.

Shipping companies that carry grain to overseas destinations charge demurrage fees for each day that their vessels sit empty at port, waiting to load.

During the grain transportation backlog that occurred in 2013-14, total demurrage fees were estimated at more than $40 million, according to APAS.

The fees, initially paid by grain handling companies, are eventually passed on to farmers.

Lewis has written to federal Transport Minister Marc Garneau and federal Agriculture Minister Lawrence MacAulay, calling for Canada’s railway companies to pay demurrage charges incurred during the 2017-18 shipping season.

Demurrage costs typically range between $11,000 and $13,000 for each day a vessel’s waiting time exceeds the terms of its shipping contract.

“Given that the railway companies are responsible for these delays, APAS is proposing that in any week that grain shipments fall below 85 percent on hopper car deliveries, both railways share the cost of demurrage,” Lewis said in a March 28 news release.

Lewis lamented the fact that a major Canadian railway company recently described the current grain shipping situation as a “fictitious grain backlog.”

According to the latest weekly report from the federal Grain Monitoring Program, there were 20 ships waiting to be loaded at the Port of Vancouver in Week 34, down from 30 the week before.

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